January 2009

January 20, 2009

The Greater London Authority stated
that London's offices in the key emerging markets of India and China
will stay open despite Boris Johnson's earlier pledge to close them. The present blog has commented on this enforced U-turn, including references to Boris Johnson's and the Tories demagogic and damaging campaigns to close these offices during the Mayoral election. Boris Watch has now carried an excellent summary of additional parts of this Evening Standard and Tory campaign which can be read here.

The Greater London Authority has announced that London's offices in the key emerging markets of India and China will stay open despite Boris Johnson's earlier pledge to close them. This is reported in blogs by Mayor Watch, Dave Hill, and Boris Watch (and a short report in the Evening Standard). The present author has posted the following comment on these blogs.

* * *

This issue
is no small one as it symbolises perfectly the backwardness of the
Johnson administration. Johnson himself went on the Nick Ferrari programme to pledge these offices would be closed. The first point on the election addresses of Tory candidates for the London
Assembly was a pledge to close down London's representative offices
abroad. They were absurdly labeled 'embassies', when they are small
offices, precisely to appeal to the most backward.and ignorant
sentiments.

The review of the offices now finds the resons for opening them are 'fundamentally sound'
and that 'the GLAs offices do play an important role in promoting
Londons interests, from supporting the capitals businesses and to
enhancing the image of our city around the world.'

I deat with this on my blog on London last November as follows and the comment remains entirely valid:

'Few
things illustrate Boris Johnson's administration's failure to
understand the modern world, and therefore its incompetence, more
completely than the saga of London's offices set up to represent and
promote the city in India and China - the world's most rapidly growing
giant new economies. It is an issue thrown into particularly graphic
light by the current world financial crisis.

'During the Mayoral
election campaign Boris Johnson, and Tory candidates, did everything
possible to present it is as ridiculous for London to maintain offices
to promote the cty abroad - Think London, the city's inward investment
agency, which is funded by the London Development Agency, also has
offices in the US.

'Boris Johnson and Tory candidates frequently
attempted to exploit the most backward looking sentiments regarding
these - often making attacks on them the first point in their campaign
literature.

'Thus for example Richard Tracey, Tory candidate for
Merton and Wandsworth, announced in his election leaflet to electors:
'Local Conservatives are campaigning to remove the extravagances such
as Ken Livingstone's "foreign embassies". Matthew Laban, Tory candidate
in Enfield and Haringey, in his address to constituents, attacked that
‘our money has been spent opening embassies in other countries.

'Boris
Johnson himself took the same position. Taking the Nick Ferarri show on
Wednesday 12th December 2007, Ferarri asked: ‘And would you continue
bureaus in Venezuela, Delhi, Beijing and everywhere else? Yes or no.
Boris Johnson: "No."

'This pledge was strongly attacked by
leaders of Londons businesses, who understood the importance of these
decisive new markets overseas - for example at the Mayoral London
business hustings on 26 March.

'Boris Johnson, worrying about
such business criticism, therefore scrapped his previous pledge to
close the offices and announced to the Evening Standard the same day
that he would ‘review them. Then on 14 April he announced in his
business manifesto today that ‘we fully endorse the representation of
London overseas (p13). In other words a complete U-turn.

'That,
however, as has already point out above, did not stop Tory candidates
across London campaigning against Londons representative offices. There
was, in short, a complete shambles.

'And what is revealed by the
present international financial crisis, of course? That the two
economies in the world which will be most relatively strengthened by
it, because they are continuing to grow most rapidly through the
crisis, are China and India - the places where Boris Johnson pledged to
close down London's representation. A truly brilliant move that would
have been. And of course his administration would never have opened
them in the first place.

'It is said that the difference between
a statesman and a politician is that a statesman leads the country and
a politician follows it. Ken Livingstone will be remembered as a great
Mayor of London because he led the city to face key challenges that
confronted it at the beginning of the 21st century - just as, in a
different way, he redefined politics in London by facing the different
challenges it confronted twenty years previously when he was leader of
the GLC. Boris Johnson's administration, as shown vividly by its
opposition to London's offices abroad, and its use of the most ignorant
sentiments to attack them, has no understanding of the the most
important challenges that face London at the beginning of the 21st
century.'

Reality has hit Johnson's administration over the head
and forced it not to close the offices - except they would never have
set them up in the first place, leaving London unrepresented in the
world's most rapidly growing large markets.'

To make explicit my
interest, as Director of Economic and Business Policy under Ken
Livingstone I was responsible for the policy of openng London's offices
abroad.

January 18, 2009

The first of the major international outdoor cultural events to be abandoned by Boris Johnson is the Russian Winter Festival - which should have taken place this weekend. This open air celebration, staged at the time of the New Year according to the old Russian Orthodox Calendar, that is in mid-January, had become a major annual London event.

The Russian Winter Festival was highly recommended by the national press, frequently on 'choice of the weekend' lists, was of high artistic quality, and attended every year in Trafalgar Square by well over 50,000 people.

But, in addition to being a good time for Londoners and their families, it also had a very serious economic purpose by being the major annual event in London's promotional drive in Russia – a market becoming of great importance to London's economy and therefore for Londoners incomes and jobs.

Russia became the single most important foreign section for foreign listings on the London Stock Exchange. In 2007 CIS (former USSR) companies raised over $19 billion in Initial Public Offerings (IPOs) on the London Stock Exchange. Trading volumes in 2008 for CIS companies were $477 billion. London had completely out competed New York in this market, with New York not floating a single major Russian company in recent years.

Russian tourists have become one of the most rapidly growing source of customers for London's West End – with annual rates of growth of increase in spending, which can be calculated from VAT refund returns, of over 40 per cent.

Russia's three votes on the International Olympic Committee were decisive in winning London the Olympic Games against Paris.

The positive consequences of this for London's financial, business services, tourist, and retail sectors is evident - all of which translates into incomes and jobs for Londoners.

The Russian Winter Festival generated large scale TV coverage in Russia – over 30 pieces of Russian TV coverage in 2007 alone for example. A few pieces of the coverage are put as videos at the end of this post. The equivalent advertising value to London in Russia of the TV coverage was several million pounds.

Given that no other city staged such a prestigious event it helped make London a welcoming natural home for Russian business people and tourists whose combined spending is worth hundreds of millions of pounds a year to London and is growing in importance. Whatever the ups and downs of political relations with the Russian government Londoners jobs depend increasingly on such international markets.

The Russian Winter Festival, in short, was an extremely smart piece of marketing - generating the equivalent of huge advertising for London in a key market and simultaneously giving Londoners a good time. Given the international financial crisis, and the fall in the exchange rate of the pound which makes London a still better value destination, London should be stepping up, not cutting, its international marketing efforts.

It is, therefore, typical of the Johnson administration's inability to judge the value of money for most things that it has abandoned the Russian Winter Festival.

Given Russia's importance in its three votes securing London the Olympic Games this will be dealt with separately – again because it shows how the international promotion of London under Ken Livingstone's administration secured huge economic benefits for London and why the present administration is incapable of winning any comparable major prize for London precisely due to both its economic incompetence, its complete failure to understand the nature of the modern international economy, and a consequent inability to understand what constitutes serious value for money.

Video - Coverage of the launch event of the Russian Winter Festival January 2008